Feeling the pinch as energy, feedstock and transportation costs continue to rise at staggering rates, chemical manufacturing giant Dow Chemical Co. said that as of June 1 it will raise the price of all of its products by up to 20% — depending on their exposure to the various rising costs — and will review all terms to all customers.

Dow CEO Andrew N. Liveris said the sweeping price increases and reviews are essential as the company attempts to mitigate the extraordinary rise in energy and related raw material costs.

“Our first quarter feedstock and energy bill leaped a staggering 42% year over year, and that trajectory has continued, with the cost of oil and natural gas climbing ever higher,” Liveris said. “The new level of hydrocarbons and energy costs is putting a strain on the entire value chain and is forcing difficult discussions with customers about resetting the value proposition for our products.”

In a year to year comparison, front-month crude oil futures prices have more than doubled from $65.20/bbl for the week ended May 25, 2007 to $132.19/bbl for the week ended May 23, 2008. Likewise, front-month natural gas futures prices have vaulted higher from $7.640/MMBtu during the 2007 week to $11.857/MMBtu for the 2008 week.

Dow says it spent $8 billion on energy and hydrocarbon-based feedstock costs in 2002. At the current rate, those costs would climb to $32 billion this year.

“In addition to these price increases,” Liveris said, “the company is continuing its aggressive cost-control plan internally and is accelerating its existing top-down competitiveness review for all of its businesses and manufacturing facilities in the light of these new feedstock and energy prices.”

Dow is a diversified chemical company with 46,000 employees worldwide and annual sales of $54 billion. The company delivers a broad range of products and services from fresh water, food and pharmaceuticals to paints, packaging and personal care products.

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